Schedule a Consultation: 858.483.9200

We recently wrote about new laws taking effect here in San Diego and California that are attempting to prevent secrecy with respect to settlements and testimony in sexual harassment, discrimination, and retaliation cases. See California Senate Bill 820 and Assembly Bill 3109.

In another anti-secrecy development, the National Labor Relations Board has issued an Advice Memorandum holding that an employer’s “gag order” with respect to certain wage/benefits litigation was unlawful. The proceeding is captioned in re Uber Technologies, Inc., 19-CA-199000 (NLRB Adv. Mem. October 2, 2018). Click on link at “Advice Response Memo” for a PDF of the opinion.

Overview

Employers should be cautious in issuing litigation “gag orders” if the case involves employees’ wages and benefits and employers should strengthen language in Employee Handbooks to help overcome the objections made by the National Labor Relations Board. An experienced San Diego corporate attorney can offer advice and guidance.

Background

Under section 7 of the National Labor Relations Act, employers who are covered by the law may not unreasonably interfere with the collective action of their employees. In general, such activities are deemed “protected activities.” One example of a “protected activities” is the discussing among themselves, or with the media or with third parties the facts and issues related to wages. After all, the gist of collective bargaining is negotiation over wages and benefits. Thus, demanding secrecy with respect to wages and benefits would certainly impede the collective action of workers.

Facts of the Case

In May 2016, various drivers for Uber Technologies, Inc. filed a lawsuit in federal and state court against their employer. The plaintiffs were requesting to be certified as the class representatives of all Uber drivers. The allegations concerned wages and benefits. Essentially, the lawsuit alleged that Uber had misclassified them as independent contractors rather than as employees. As employees, Uber drivers would be entitled to many benefits not given to independent contractors such as overtime pay, meal and rest breaks, FICA matching contributions, workers compensation coverage, and more.

Shortly after the case was filed, in-house Uber attorneys sent out emails to several employees which notified them of the lawsuit, instructed them not to comment on the lawsuit, and directed them to refer any inquiries about the lawsuit to the in-house attorneys. The employees complained to the in-house attorneys that this set of instructions infringed on their “protected activities” because this “litigation gag order” prevented them from discussing wages and benefits with other employees, the media, or third parties. However, the in-house attorneys disagreed and sent a similar set of emails later in the year. The employees brought proceedings with the National Labor Relations Board.

In response, Uber argued that the emails were lawful because they went out to only a few employees and that Uber had provisions in its Employee Handbook that clearly stated that that employees are not restricted from discussing compensation.

The National Labor Relations Board rejected Uber’s arguments. The lawsuit was about wages and benefits and thus was at the core of collective action and common grievances. As such, any direction by Uber to any employees to not talk about the case infringed on protected activity. According to the National Labor Relations Board, the infringement was more serious since the case was a class-action lawsuit where efforts would have been underway to contact other employees to join and become members of the class.

As for the provisions in the Employee Handbook, the National Labor Relations Board rejected the idea that the Handbook “cured” the problem created by the emails. The National Labor Relations Board asserted that employees would “reasonably infer” that the emails — sent repeatedly — would supersede anything written in the Handbook. For these reasons, the National Labor Relations Board rejected Uber’s arguments and held the “litigation gag order” to be unlawful.

What Should San Diego Businesses Do?

As noted above, caution should be taken with respect to issuing litigation gag orders, particularly if the case is a class action and involves claims related to employee wages and benefits. Any proposed gag order should be narrowly drawn. Further, Employee Handbook provisions should be strengthened to include reference to class action lawsuits. As noted, an experienced San Diego corporate attorney can help.

Contact San Diego Corporate Law Today

For more information, contact attorney Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard can be reached at (858) 483-9200 or via email. Mr. Leonard provides legal services related to business law and corporate matters including reviewing and keeping your Employee Handbooks up-to-date and compliant with evolving legal requirements.

Share This Story, Choose Your Platform!

Michael J. Leonard, Esq., is an award winning attorney whose practice focuses on corporate, securities, contract, and intellectual property law for small and medium businesses. In his practice, Mr. Leonard routinely assists his clients with the formation of business entities, financing through the sale of debt and equity securities, mergers and acquisitions, contract drafting and review including commercial leases, and establishment and licensing of trademarks, copyrights, and trade secrets.